These momentum shares have been wildly volatile in recent sessions after a sharp selloff that began in March on concerns about their high valuations.

"I think it's stabilizing a little bit for those stocks. Some would say they're still overvalued, but they've come down enough that it doesn't seem they have that much further to fall. Now people are trying to pick up bargains, and some of those stocks have been going up," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois.

The Russell 2000 <.TOY> index of small-cap stocks climbed 2.4 percent, its biggest daily percentage gain since early March. At its session low Friday, the index was down exactly 10 percent from the intraday record high set in early March. A correction, which is a drop of 10 percent from a recent high, is often seen as a harbinger of more weakness. The iShares Russell 2000 ETF rose 2.3 percent.

The Dow Jones industrial average <.DJI> gained 112.13 points or 0.68 percent, to 16,695.47, a record closing high. The Dow also hit an intraday record high of 16,704.84.

The S&P 500 <.SPX> rose 18.17 points or 0.97 percent, to 1,896.65, also a record closing high. The Nasdaq Composite <.IXIC> climbed 71.99 points or 1.77 percent, to 4,143.859.

The rally came despite a vote by pro-Russian rebels in favor of self-rule in eastern regions of the country in a referendum dismissed by Kiev and Western governments as illegal. The European Union is set to step up pressure on Russia by taking steps to extend sanctions to companies, as well as individuals.

U.S.-listed shares of Indian companies and India-related exchange-traded funds also rose as exit polls in India predicted that the country's main opposition party - viewed as more business friendly - would win general elections. Among ETFs, the Wisdom Tree India Earnings Fund gained 3.7 percent.

In the latest development on deals in the healthcare sector, shares of U.S. drugmaker Allergan Inc dropped 1 percent to $159.72 after the company, known for Botox, its popular anti-wrinkle treatment, rejected Valeant Pharmaceuticals International Inc's takeover offer of $47 billion. Valeant's U.S.-listed shares slipped 0.8 percent to $130.16.

After the bell, shares of DirecTV rose 6.6 percent to $92.95 after a source said AT&T Inc is in advanced talks to acquire the company.

During the regular session, shares of 21st Century Fox rose 3.1 percent to $35.19. Britain's largest pay-TV company BSkyB is in talks to buy Sky Deutschland and Sky Italia. Murdoch's 21st Century Fox is BSkyB's biggest shareholder.

About 5.8 billion shares changed hands on U.S. exchanges, below the 6.2 billion average for the month to date, according to data from BATS Global Markets.